In part 1 of this MDM exclusive interview, Prentis Wilson, Vice President of Amazon Business, shares his thoughts on the value proposition of Amazon Business, its current focus and the polarized view many distributors and suppliers have for the company’s market position. A complete version of this interview will be available on MDM’s new podcast series, Disrupting Distribution.
Amazon Business launched in 2015 to replace Amazon Supply, which started in 2012. But its history goes back more than a decade to when Amazon built its first B2B marketplace on the platform of SmallParts.com, an appliance parts web site acquired in 2005. The company historically has been quiet in revealing its market strategy, which has led to a combination of fear, hyperbole and polarization around any discussion of Amazon Business among distribution and supplier executives. What seems to have been lacking is relevant context to help distributors make informed decisions about whether to partner or protect.
Amazon’s B2B market position is changing fast. In MDM’s most recent research (MDM May 10, 2018), a survey by Real Results Marketing found that while more than two-thirds of distributors surveyed view Amazon as a threat, more than a quarter of distributors polled said they sell, or are willing to sell, all the products they carry on Amazon Business.
The company is starting to communicate more into distribution channels, including making its top executive available for an interview with MDM. While not revealing new insight into Amazon Business’s core strategies, Amazon Business Vice President Prentis Wilson does openly discuss its growth, view of distributors as customers and where the company is headed.
MDM: Prentis, give us a little background on your career in procurement and manufacturing prior to your current role.
Prentis Wilson: I actually started my career in manufacturing. I spent most of my time on factory floors, making everything from truck brakes to turbocharging systems. I held a variety of roles, whether it be manufacturing, engineering, to actually running the manufacturing operation. I got into procurement and sourcing because when I was running a factory, my lines kept getting shut down because our suppliers were unable to keep up with demand. I shifted my focus to engage with our supply base, and found that I loved it. It was a terrific time working with suppliers and helping them grow and develop. Through that effort, I grew into senior procurement roles at Honeywell, both Honeywell Aerospace and then also to leading all of procurement and sourcing for Cisco Systems.
One of the biggest challenges we faced was our obligation and policies focused on being able to buy from minority-owned or women-owned businesses. Being able to find and discover those businesses was often hard to do, particularly given that the cost of being able to manage the supply base and fully integrate and engage with those suppliers can get expensive. So there’s always these efforts to rationalize the supply base, yet you’re trying to always discover new ones.
As I was engaging with Amazon I thought to myself, “this is a huge opportunity to apply technology in a way that really helps these businesses reach more customers, and really help solve a big problem that we see across industry.”
MDM: Did you have either responsibility or connection into both direct and indirect spend?
Wilson: Yes, I did. Especially at Honeywell. I managed all of procurement and supply chain, which included both sides.
MDM: Your background in manufacturing and procurement seems to tie into the two channels that Amazon Business serves its customers with. In the evolution of that portal the first has been leveraging Amazon technology to create solutions for the long-tail spend challenges of organizations for spot buys, and more recently it appears that Amazon Business is investing in solutions for broader enterprise, e-procurement challenges. Is that accurate? What are your views on how these channels have developed?
Wilson: Yes. It’s super interesting; when we first launched Amazon Business, obviously we knew there was a big issue and big opportunity to solve the long-tail need of businesses. Amazon has a broad range of products, as well as a broad range of suppliers. We simplified the buying experience, so we can quickly come in and help our customers solve theseneeds and be able to help them reach more suppliers. Early on, our focus was heavily on tail spend because it was just a natural place to start. We engage with our customers a lot, and we stay very much obsessed with meeting their needs, and our customers have continued to push us to expand our relationship with them.
Now, we are definitely broadening our reach to be able to support larger customers with broader numbers of employees through their procurement systems. And in doing so we are actually bringing a lot of these suppliers into this customer’s ecosystem, where we do all of the heavy lifting of the e-procurement system engagement.
We do all the heavy lifting of figuring out how to set up payments and payment processing, and essentially enable all of these suppliers – whether they are local or minority suppliers – to be able to reach these customers. As we see it coming to fruition and hear from our customers, it’s really solving a big need for both the buying customers as well as the suppliers.
MDM: Essentially, Amazon Business really facilitates and helps to manage a multi-tier supplier relationship – is that what the picture looks like?
Wilson: Absolutely. Our marketplace is geared to simplify the buying experience, and to help suppliers reach more customers, and it does both of those things.
MDM: Does Amazon Business Marketplace solve the long-tail supply challenge with the ecosystem of vendors that now are selling through the marketplace?
Wilson: Yes. The customers that engage with us for that solution provide a lot of positive feedback; they’re very happy with how that’s working. The suppliers that engage, they’re seeing strong growth in their purchases, so it is working. We’re continuing to innovate in this area and improve the experience. We have a whole team that focuses on improving the supplier experience, so it’s easier for them to work with us and grow their sales with customers.
We also focus on customers, and there’s a broad range of capabilities that we make available. For example, there’s data analytics that help customers view and track their purchases. They can track their spend with minority-owned businesses, for example. They can track their spend in certain categories. It just helps them better manage their purchases.
MDM: It’s internally connecting the procurement function with the back-end financials as well for a customer?
Wilson: That’s right. It adds a broad amount of visibility for customers. Frankly, one of the things we heard a lot from customers early on was that they lack visibility into their long-tail purchases. Not only is Amazon Business giving them visibility into that, it helps them manage it better and make sure they’re directing those purchases to where they want them to go.
MDM: What do you see as the next stages to extend Amazon Business’s value into enterprise organizations?
Wilson: We’re laser focused on supporting the needs of our customers, and we are innovating there. We do see a rapid growth in customers that are adding literally thousands of employees on a single account, and we’re making it easy for them to be able to manage their purchases, get visibility into those purchases, and be able to really bring a very intuitive buying experience to those employees.
That’s been really helpful for them, and particularly for some of our customers that have a strong desire to be able to search for certain types of suppliers. Those things are happening now through our marketplace, and we’re enabling customers to set preferences and identify preferred suppliers that they can buy from, which is really adding a lot of value for both the suppliers and the customers, as well as individual buyers.
MDM: Shifting gears a bit – wholesale distribution in the U.S. is a more than five-trillion-dollar market, in terms of what flows through distribution channels across 19 major product sectors and many more sub sectors. From your experience, you’ve seen that it’s been a sustainable – if not perfect – model to create a flexible supply chain, and an extremely strong economic infrastructure. Is Amazon Business building the supply chain model of the future that will replace what’s worked for essentially decades?
Wilson: I think we’re in an incredibly interesting time right now, where technology is making things change across the board, and enabling suppliers to reach more customers. I think it’s also enabling customers to be smarter in their purchases. It’s just starting to transform how things are done. I think the technology that we’re providing in the marketplace, that Amazon Business has built and is continuing to grow, is actually going to accelerate things for a lot of the distributors out there. It helps them reach more customers more efficiently. We’re also going to be able to use technology to reduce a lot of the waste and inefficiencies that are out there, and it’s going to really improve the discoverability and growth for a lot of companies.
MDM: Let me ask the elephant-in-the-room question. If you’re in front of a group of distributors, manufacturers, B2B suppliers that are considering marketplace options, what do you say to them to alleviate fears that Amazon Business could leverage their transaction data intelligence to displace them at some point?
Wilson: I find that there’s a lot of confusion out there; what a lot of people – particularly distributors – maybe don’t always recognize is that suppliers are our customers too. We focus very heavily on helping them reach more customers. We spend a lot of time improving the experience for these companies, and there’s been a number of distributors that have embraced Amazon Business, and seen strong growth through that. In fact, top of mind, there’s an office supply company that’s engaged with us who won a bid with a company – one of our larger customers – and they’re doing millions of dollars now just in their first quarter. Part of this is we help them get connected to a customer that they otherwise wouldn’t be connected with, and it’s been a big win for them.
MDM: From the way you describe it, the next question is this: Is it possible to be both a channel disrupter as well as a business partner at the same time? Or is that the right question?
Wilson: I’m not sure I would think of it that way. I think what’s happening is the way procurement happens – there’s a lot of innovation and Amazon Business is changing the way the procurement system works. I think it’s changing things for the better for everyone. We’re really helping to improve the supplier discovery process, while also helping companies reach more customers, and making it easier for businesses to be able to buy the way that they want to buy. I think in doing so it removes a lot of inefficiencies and a lot of waste. It’s also helping to accelerate purchases in a lot of areas and helping people be able to leverage their strength to grow.
MDM: Then is there a way that Amazon Business can address the polarization that is taking place in distribution channels to specifically address the threats that are out there, and discussed at conferences, and what you’ve seen across a lot of the media channels?
Wilson: I think one of the biggest things that should happen is that companies that provide information to these distributors and suppliers – it’s important if they really deeply understand what’s actually happening, so that when they’re providing information back to these companies, it’s accurate, and it helps them actually draw the correct conclusion. I think sometimes companies get confused, or sort of misled in some ways, and the most important thing for people to realize is that this technology is here for them and helping them grow. There are a lot of companies that are really seeing the benefits. It’s also important for these suppliers to realize that we view them very much as our customer, and we do work hard to improve the experience for them.
MDM: Are there specific ways that information providers like us could do that? In terms of providing that deeper understanding?
Wilson: You know, I think this podcast is a great example of how we could do that. I think there are opportunities for us to engage more frequently, so that you’re more aware of what’s actually happening, so that you’re able to further inform your constituents. I think those things could all be super helpful. Things are changing fast. Amazon Business evolves very quickly. We look very different in a very short amount of time due to the rate of innovation and the focus we have on our customers, so just staying on top of that, I think, is important.
Part 2 of this interview appears in the June 10 issue of MDM.The complete interview is available in early June in our new podcast, Disrupting Distribution.